Position Paper November 2019
CFA Institute Blueprint for the EU Capital Markets Union for the European Parliamentary Legislative Period, 2019–2024
An overview of issues facing 2019-2024 European Union policymakers tied to CFA Institute recommendations and research.
CFA Institute Blueprint for the EU Capital Markets Union for the European Parliamentary Legislative Period, 2019–2024View the full article (PDF)
This blueprint addresses four principal topics: capital markets union, fintech, sustainable finance, and value for money. These four themes are priorities for CFA Institute members and also represent the areas in which our policy experts are most involved and engaged. We remain at the disposal of the European Commission and other institutions that wish to discuss these matters and our recommendations further.
Capital Markets Union
The main opportunities for the capital markets union (CMU) initiative are centered around: small and midsize enterprise financing; making public markets more attractive; cross-border retail markets; and systemic risks stemming from the asset management sector.
- Focus on policies and incentives and products that will encourage long-term investments by savers.
- Focus policies on the mechanisms that could be necessary to ensure an efficient market for independent research.
- Monitor the impact of regulatory measures on smaller firms.
- Continue to set a clear focus on investor protection by enhancing standardized disclosure requirements.
- Consider the appropriate mechanism required to grant the European Securities and Markets Authority more direct supervisory powers over practices and rules pertaining to cross-border distribution of investment funds.
The main issues for fintech are an increased likelihood of flows resulting from automated financial advice, crating behavioral biases in clients; and lack of regulation for crypto assets, leading to market manipulation and inefficiency.
- Introduce a European framework for crowdfunding and peer-to-peer lending.
- Facilitate and support creation of innovation resources and intermediaries for start-ups looking to use financial technology for capital raising.
- Evaluate the need to regulate crypto assets and further the discussion as to whether they constitute financial instruments.
The main issues for sustainable finance are the lack of agreed-on definitions; dissimilar training for investors; lack of quality and comparability of ESG data; the voice of the minority shareholders; variable regulatory and legislative approached for dealing with integration of ESG issues in investment analysis and decisions.
- We advocate for strong standards on how investors should include governance issues in investment analysis.
- We encourage promotion of greater board accountability to minority shareholder and discourage the practice of differential ownership.
- We support the work done by the European Commission’s Technical Expert Group and its technical report on EU taxonomy.
Value for Money
The main issues for retail investors are these: there remains insufficient understanding of how investment products are sold and fees paid; exclusion of the presentation of past performance information; PRIIPs (Packaged retail investment and insurance products) regulation regarding its scope of application remains unclear.
There is one main issue for institutional investors: MiFID II rules may have unexpected negative impact on the quality and coverage of research.
- Enhance consistency of definitions and rules.
- Focus policies on the quality and meaningfulness of the information received by investors.
- Look closer at potential unintended impacts of MiFID II rules.
- Clarify the scope of application of the PRIIPs Regulation.
About the Author(s)
Josina Kamerling is head, regulatory outreach, for CFA Institute for the Europe, Middle East, and Africa (EMEA) region and is based in the Brussels office. She is responsible for supporting CFA Institute's EMEA policy development, advancing the impact of advocacy efforts, and promoting capital market integrity and investor protection issues.
Roberto Silvestri is EU policy specialist for CFA Institute, and is based in the Brussels office. He supports CFA Institute capital markets policy activities and developments for the Europe, Middle East, and Africa (EMEA) region. Prior to joining CFA Institute, Roberto was a Robert Schuman trainee at the European Parliament in Brussels where he worked in the ECON Team of the Policy Department for Economic, Scientific and Quality of Life Policies. Previously, he had an internship at Assonime (Association of Italian joint stock companies) in Brussels.
Roberto holds a postgraduate master’s degree in European economic governance from the School of European Political Economy at LUISS Guido Carli in Rome, and a master’s degree in social and economic sciences from University of Rome Tor Vergata.
Olivier Fines, CFA, is head of advocacy and capital markets policy research for the Europe, Middle East, and Africa (EMEA) region at CFA Institute. With teams based in London and Brussels, he leads the effort in researching and commenting on the major trends that affect the investment management industry, changes to the profession, and policy and regulatory developments. The positions taken on these issues and the research pieces that are published are meant to promote the fundamental principles upheld by CFA Institute: investor protection, professional ethics, and market integrity. Previously, Mr. Fines spent 15 years in investment management—spanning research, portfolio management, product management, and regulatory compliance work—at firms based in Paris and London. Prior to joining CFA Institute, he was head of risk and compliance at Rothschild & Co for the private equity and private debt division.
Sviatoslav Rosov, PhD, CFA, is director, capital markets policy, EMEA, at CFA Institute. He is responsible for developing research projects, policy papers, articles, and regulatory consultations that advance CFA Institute policy positions, focusing on market structure and wider financial market integrity issues.
Kazim Razvi is director, financial reporting policy for the Europe, Middle East, and Africa (EMEA) region at CFA Institute. He is responsible for representing the interests of CFA Institute on financial reporting and on wider corporate reporting developments to major accounting standard setting bodies, enhanced reporting initiatives, and key stakeholders.
Prior to joining CFA Institute, Kazim was a global head of Accounting Research & Policy at Fitch Ratings and served as a member of the EFRAG Pension Plans Advisory Panel and the FRC Investor Advisory Group (IAG). Kazim also worked as a technical accounting advisor to Moody’s; helped set up a technical department for Augentius Private Equity Funds Administration; and qualified as a chartered accountant with Ernst & Young, working in its banking and capital markets division.